- APAC market remains appealing for investment, exhibiting significant growth potential despite being relatively nascent compared to its American and European counterparts.
- Urgency for localised data centres due to data localisation laws are driving unprecedented demand, particularly in Southeast Asia.
The Asia Pacific (APAC) data centre market is currently experiencing a remarkable surge in mergers and acquisitions (M&A), propelled by strong consumer demand and a constrained asset landscape.
With significant deals capturing headlines, such as Blackstone’s historic AU$24 billion (approximately $16 billion) acquisition of Australian data centre platform AirTrunk, the momentum of M&A activity is indicative of the broader trends reshaping the industry.
The acquisition, recognised as the largest of its kind in data centre history, alongside DigitalBridge’s acquisition of Yondr Group—a global developer of hyperscale data centres—highlights the aggressive consolidation strategies employed by major players in this burgeoning sector.
Moreover, the third quarter of 2024 showcased a remarkable year-on-year increase of 114 per cent in investment, reaching $2.8 billion, as reported by JLL’s Capital Tracker. This statistic underscores not only the appeal of large-scale mergers but also the rising prevalence of asset-level transactions.
Evolving investment landscape
One notable example includes the 734 billion South Korean Won sale of Hanam Data Centre by IGIS Asset Management—the first sale of a fully operational and pre-committed data centre in South Korea.
The shift towards asset-level deals, formerly uncommon due to operators’ preference for owning their facilities, reflects the evolving investment landscape in markets such as Japan and Korea, where savvy investors are successfully acquiring critical resources like land and power.
The driving forces behind this M&A frenzy include robust demand from consumers, cloud service providers, and the burgeoning need for artificial intelligence infrastructure. As articulated by industry experts, limited asset availability, coupled with favourable market conditions, exacerbates this demand surge.
Maximising value
Bob Tan, Executive Director of Capital Markets Transactions at JLL, said the critical juncture the sector faces, with many data centres in APAC nearing operational status.
Thus, operators and investors are confronted with strategic decisions regarding asset management, which may lead to further M&A activities or joint ventures in pursuit of maximising value.
According to Celina Chua, Director of Data Centre Client Solutions at JLL, the APAC market remains appealing for investment, exhibiting significant growth potential despite being relatively nascent compared to its American and European counterparts.
Factors such as increasing mobile penetration and the urgency for localised data centres due to data localisation laws are driving unprecedented demand, particularly in Southeast Asia. In more mature markets like Japan and Australia, government initiatives aimed at digital transformation intensify this momentum.